Oral Answers to Questions

Phil Wilson: What steps is my hon. Friend's Department taking to promote employment rights to the low paid and increase their awareness of the minimum wage?

Patrick McFadden: The Chair of the Select Committee on Business and Enterprise makes a good point about the value of post offices to small businesses. He again mentioned the Post Office card account, but I cannot go any further than my right hon. Friend the Secretary of State for Work and Pensions, who told the House on Monday that this decision would be taken in a proper way, and that when there is an announcement to be made, we will make it.

Patrick McFadden: My hon. Friend makes a good point. The Post Office has seen increasing success in offering financial services over the past couple of years, and not only in the area mentioned by my hon. Friend: the Post Office is now the leading retailer of foreign currency in the country, is expanding in insurance and offers deposit savings that I understand have been quite popular in recent months.

Patrick McFadden: I am aware of all sorts of speculation; whether it is wise to comment on it is another matter. I am certainly aware of the value of the card account to the post office network, but, as I have said, the decision will be taken in the proper way by the Department for Work and Pensions. When a decision is reached, it will be announced in the normal way.

Patrick McFadden: We are certainly not ashamed. We have put large financial sums into supporting the Post Office network; some £150 million a year. Without that level of subsidy, thousands more branches would be under threat because the Post Office is losing £500,000 a day and has lost 4 million customers a week in recent years. The decision on the card account will be taken in the proper way by colleagues at the DWP and, when we are ready, it will be announced in the normal and proper way.

Simon Hughes: Yes, it was an election year. No Government have announced such a small number of sitting days for nearly 30 years.
	When people are going to lose their jobs, for us to give ourselves holidays—an extended Christmas and new year holiday, for instance—[Hon. Members: "It is not a holiday."] It is a break from this place. For the House of Commons not to come back to work between July and October gives it the most adverse reputation out there.
	The Deputy Leader of the House and his colleagues have indicated that they are interested in constitutional reform. Will the Deputy Leader now say whether the Government are serious about handing over control of the business of the House from the Government to Parliament? If he does not tell us that, I will table a motion for us to debate, proposing that Parliament should be in charge of Parliament's business, not the Government, who are clearly rigging it to their own party-political advantage.
	We heard today of the continuing difficulties of establishing a political settlement in Zimbabwe. May we have an early debate about whether asylum seekers from Zimbabwe who cannot go home should be allowed to work in this country while they wait for their cases to be decided? I gather that there are Ministers who share that view, and it is the logical view. I ask for us to be able to debate the matter, so that those poor people who cannot go back to their own country, who want to work here, pay taxes and contribute, and with whom Britain has the strongest links, can have an opportunity to participate in this country while their future is determined.
	Finally, yesterday we received a major lobby on pensions. May we have a debate on the state pension before the uprating statement, so that we can quiz the Government on whether the level of the pension will be what pensioners need and demand, and whether it can be what pensioners who have worked believe, honestly, that they deserve?

Chris Bryant: The hon. Gentleman, who is a former Defence Minister, speaks wisely in that it is important that the House receives regular updates on what is happening, because we all know from our constituencies that people are in some cases laying down their lives on an entirely honourable basis in Afghanistan, to protect the people of Afghanistan, to bring peace there and to protect security in the world. There will be a debate on defence next Thursday afternoon, and I am sure the hon. Gentleman will want to take part in it. I should just say, however, that this Prime Minister has appeared very regularly in the House and made statements on a wide range of issues, and I know that he takes his responsibility of making sure that the House is updated on these important issues very seriously.

David Heath: I think the House will agree that it is as important that we show as great an interest in small businesses as in the situation of the people in the City. Notwithstanding yesterday's statement on this matter, may we therefore have a debate in Government time on small businesses, in order to answer some of the questions about which Ministers only waffle, such as how we can provide proper access to the small firms loan guarantee scheme, how we can avoid the arbitrary call-in of overdraft facilities by banks, how we can create flexibility on the part of Her Majesty's Revenue and Customs and discuss the malign effects of the empty property tax?

Tony McNulty: I agree with much of what my hon. Friend says. I do not agree that there is now a mixed economy, for want of a better phrase, in skills provision or that there has been a laissez-faire approach that has somehow led to a diminution in the importance of skills. I do not think that that is necessarily accurate. The work that the Department for Innovation, Universities and Skills is doing alongside the Department for Work and Pensions is very important and there has been much progress.
	I agree with my hon. Friend that in much of the other work that DWP and Jobcentre Plus are doing we need to start looking forward and to understand the consequences of the economic turbulence, not least in the financial sector, and to respond accordingly to what we think the future of skills provision might look like. I can assure my hon. Friend that a lot of close work takes place between the Department for Innovation, Universities and Skills, my Department and others in that regard, in trying to preserve people in their jobs, to support sectors and to encourage reskilling and refocusing where possible. I was going to come on to that in the short time that I have left.
	My hon. Friend will know that in collaboration with the Department for Innovation, Universities and Skills we announced last week a cash injection of some £100 million over the next three years to help people who are newly redundant, or who face redundancy, to move into another job quickly by supporting them to refresh their skills or to retrain. Earlier this week, my right hon. Friend the Secretary of State for Innovation, Universities and Skills announced a £350 million fund that will refocus the in-work support available through Train to Gain to help small businesses deal with the tougher economic climate by developing the skills of the staff.
	My hon. Friend the Member for Luton, North (Kelvin Hopkins) might not yet have seen the details of the announcement by my right hon. Friend the Secretary of State for Business, Enterprise and Regulatory Reform of his wider solutions for business and of the company support package that was announced earlier today.

James Clappison: We, too, welcome the opportunity to debate work and skills, but before we do so I want to welcome the Minister to his new post. We look forward to debating these issues with him. For quite how long we will be able to do so, I do not know. He will be aware that there was a major reshuffle in the Government ranks just before the summer recess. In fact, so far this year every member of the ministerial team has changed, including the Secretary of State. The right hon. Gentleman's predecessor was in place for only nine months, and his predecessor for only six months. The right hon. Gentleman might just have enough time to master the jargon and wish us "Merry Christmas and a happy new year" before he is on his way again. However, we look forward to debating with him in the time that is left.
	This is a Government debate in Government time. We note the level of participation on the Labour Benches, although we look forward to having a debate with the hon. Member for Luton, North (Kelvin Hopkins) as well as with the sole representative of the Liberal Democrats and my colleagues in the Opposition. Notwithstanding that limited participation— [ Interruption. ] The hon. Member for Stroud (Mr. Drew) is a latecomer to the debate, in quite what circumstances I do not know.
	Notwithstanding the levels of participation on the Government Benches, we understand the salience of this subject to our country today. It is certainly not lessened by last week's news on unemployment. That news makes it all the more important that we should have an effective system for helping people to get off benefits and into work and, in the case of the newly unemployed, preventing an undoubted blow becoming a longer-term tragedy.
	This time last week, I was in the jobcentre in Harlow, hearing first hand what is happening. Part of the picture seems to be that alongside the rise in the number of people becoming unemployed, there is a reduction in the number of job vacancies. I know that Ministers are apt to talk about the level of vacancies, but I have to tell this Minister that people are reporting fewer vacancies. That is the real experience of people looking for jobs.
	The Minister mentioned the situation with Bradford & Bingley and the pain that job losses can cause. In fact, several hundred of the job losses announced by Bradford & Bingley fell in my constituency, in the town of Borehamwood. I was in the jobcentre in Borehamwood a fortnight ago. My hon. Friend the Member for Weston-super-Mare (John Penrose) made a good point about helping people who have come from financial service backgrounds to find work. The Minister's response to it was also well made. We will certainly work together with the Government on that.

Tony McNulty: I apologise for not intervening on the hon. Member for Henley (John Howell). I felt for a while that that was obligatory, so I am sorry that I was not quick enough to do so.
	I thank the hon. Member for Hertsmere (Mr. Clappison) for welcoming me to my new position. I look forward to working with him and his team, in between being Minister for employment and Minister for London. I know him to be a gentleman and someone who is very studious in whatever brief he has. I also look forward to working with the hon. Member for Rochdale (Paul Rowen).
	I would take three key words from this debate: practicability, simplicity and flexibility. Those three aspects underline much of what has been said in all the perfectly fair contributions. It is important to return to my little faux pas about my hon. Friend the Member for Stevenage (Barbara Follett), because my hon. Friend the Member for Luton, North (Kelvin Hopkins) is both right and wrong. Yes, of course, given the public funding and the need for money to go where we can exact the best return, we must concentrate on areas where the lack of skills is at its greatest. However, I do not accept that areas such as Henley, which we have just heard about, can almost be left alone. The regional contribution of each and every area, whatever its starting base, is hugely important for our economy.
	Wherever we are going in the current economic downturn, its impact could be desperately disparate and different in various areas, and the relativity of its impact could be very important. For example, on the latest figures, the most significant increases in the claimant count were in the south-east and south-west, albeit from a low base relative to other areas—but that does not mean that we should not be doing all that we can, as flexibly as we can, for the south-east and the south-west. The lowest increase was in London—5 per cent. as opposed to about 30 per cent. in the south-east and south-west—but we know that there is a huge quantum of unemployed in London because of the nature of its labour market. The National Economic Council, the regional economic structures and the Council of Regional Ministers should be pushing back up to the national level the immediate concerns and fine-grained nuances of each and every labour market in terms of jobs lost, vacancies and skills shortages. Those points were well made, and I will try to ensure that that occurs.
	As the hon. Member for Henley said, that granularity in getting closer to what is going on in localised labour markets will be one result of moving down from the Learning and Skills Council to local strategic partnerships. What local employment partnerships have done, where they have been successful—nearly 50,000 jobs have been secured through that process—is another aspect of his point about having fine-tuning and sensitivity to what is occurring in local labour markets. That needs to happen at any time, but in a period of downturn, significant or otherwise, it needs to happen all the more. I also take his points about practicality and about having greater flexibility in matters such as Train to Gain.
	In response to the hon. Member for Rochdale, I point out that the announcement on the £350 million was made yesterday, principally in the other place, but my hon. Friend the Economic Secretary to the Treasury spent an hour here elaborating on it. If the hon. Gentleman reads  Hansard and still needs greater detail, I will happily provide it for him. This is partly to do with a sharper focus on getting from level 2 to level 3 as well as other refocusing in terms of Train to Gain. More details on how to achieve that will be elaborated on in the coming weeks.
	I do not take so seriously the comments that were rather cavalier with recent history. For the record, since 1997 long-term claimant unemployment has fallen by more than three quarters and is close to its lowest level for 30 years. Let us have the debate about nuances and trends, but not by undermining what has gone before. It is easy to assert that there are more unemployed 16 to 24-year-olds now than in 1997, but youth claimant unemployment has fallen by a quarter and long-term, and six-month-plus youth unemployment has fallen by over three quarters.
	I accept that what is very important, as the hon. Member for Hertsmere said, is not necessarily the claimant count, nor even the International Labour Organisation figures, but the number of people who remain in a workless state or entirely economically activity. We are trying to address those individuals, not least by introducing the employment and support allowance on Monday, enabling us to go through the various incapacity benefits available to individuals to replace them with one allowance, for precisely the reasons the hon. Gentleman suggests, so that no one is left behind. Those in that category who do want to work—I fully accept that there are plenty, some of whom we are not getting to as rigorously as we should—should be helped in that fashion. That will aid with regard to simplicity, as well.

Tony McNulty: I simply do not accept that characterisation. I repeat that job centres have the flexibility and contingency to meet whatever is coming in the weeks and months to come.
	I commend everyone for their contributions and thank the House for the debate.  Question put and agreed to,
	 Resolved,
	That the House has considered the matter of work and skills.

Edward Leigh: I beg to move,
	That this House takes note of the 5th, the 8th, the 14th to the 29th, the 31st to the 35th, the 37th, the 38th, the 42nd and the 50th Reports and the 1st and 2nd Special Reports of the Committee of Public Accounts of Session 2007-08, and of the Treasury Minutes on these Reports (Cm 7366 and 7453).
	It is a pleasure to open the second debate in a little over five months on the work of the Public Accounts Committee. Since our last debate, the Government have managed to achieve the impossible through the incredible, with their lifeline to the banks. The impossible achievement has been to dwarf the scale of public money encompassed by the reports in today's motion. In this debate last year, I was able to recite in a single sentence a list of public spending projects amounting to more than £60 billion. In the last month, some £500 billion has been pledged in an attempt to crack the ice covering our frozen financial system. Incredibly, the word "nationalisation" has re-entered the Government lexicon as the taxpayer now seems likely to own substantial swathes of our once mighty mortgage providers.
	I am sure that Members will agree that there can have been no clearer signal that something was really up than the news that a crack team from Her Majesty's Treasury was descending on Reykjavik. For the sake of those of our constituents whose savings are locked in Icelandic banks, including £7 million from West Lindsey district council, I can only hope it was not the same Treasury team who took four months to produce the Government's response to our tax credits report.
	Of course, the sobering events of recent weeks are not the subject of today's motion. However, the House may be interested to know that I have spoken with the Comptroller and Auditor General about the audit of the £37 billion that the Government are injecting into the banks, which is supported by the recapitalisation scheme. He is proposing to examine whether the Treasury has been able to secure compliance with the specific commitments that the banks are making to maintain lending to homeowners and small businesses; to help people stay in their homes; and to meet the criteria that the Treasury has laid down for senior executive remuneration. He will consider those matters. Alongside those issues, he will want to consider whether the wider strategic interest in strengthening the business performance of the banks has been met, thus also protecting the value of the taxpayer's investment. The Comptroller and Auditor General is expecting to report once we have seen sufficient evidence of the Treasury's progress towards those important objectives. No doubt, our Committee will wish to keep the implications for taxpayers under careful review following any National Audit Office report.
	Personally, I perceive genuine risks in any prolonged Government holding in the banking sector, however necessary those holdings may have become in the current financial crisis. The temptation, as with the former nationalised industries, will be to impose extraneous requirements of pay, employment, backing winners and artificial lending priorities, which will hinder rather than help the banks' return to financial health. In the main news on Sunday night, there was already talk about the fact that we—the public—own the banks and that they must therefore take a more public-spirited view when people fall behind with their mortgage payments. That is fair enough, but let us remember that the investments are taxpayer funded, and that the taxpayer is entitled to expect enhanced value, realised through an early return to the private sector. I am sure that that is the Treasury's view, too.
	The glacial storm that is creeping over the economy should give all Members who consider the Committee's reports cause for cold, hard reflection. As economic prospects hardened a year ago, the comprehensive spending review stemmed the flood of gold that had previously rushed in—and out—of spending Departments. Now, with the flow of taxpayers' funds diverted to the City, and the onset of an economic winter of uncertain harshness and duration, the constraints on Departments are likely to be tighter still.
	In our previous debate on the matter, I noted that the narrowed ideological gap between the major political parties placed the efficient delivery of public services—and hence our Committee's work—at the heart of the political debate. That is even more true today, for a moral imperative now embraces that political importance. Taxpayers facing difficult times have no more to give. Citizens in need will rely on public services to help them through in difficult times. A Government who rely on borrowing can afford no costly public expenditure failures. The duty of all public servants is therefore clear, vital and personal. It is to stretch every pound and squander none. That is where our Committee comes into the debate.
	The Committee's reports offer prescriptions from which, I believe, public servants can learn, and I want to emphasise today three themes that have a wider resonance. Sound financial management is paramount, reducing internal costs is essential and—perhaps most important and pertinent—understanding risk is critical if projects are to end on the right side of the dividing line between successful delivery and disaster.
	Departments need to display strong financial management if they are to withstand the slings and arrows of changing economic conditions and deliver cost-effective public services. They need the requisite finance skills, commercial acumen, the right information and leaders who emphasise that money matters. I welcome the increasing priority that is given to professional finance skills. We are delighted to say—because it reflects a long-running campaign by the Committee—that all but two major Departments now have a professionally qualified finance director. Those appointments have brought new focus to financial management in Departments.
	However, individuals cannot do it alone. Many permanent secretaries are the accounting officers who appear before our Committee, yet they have not a single financial qualification between them. They are not automatically held to account in the civil service for their management of resources. It cannot, therefore, be a surprise that so much remains to be done to embed in Departments a culture that money matters. A worrying lack of financial skills and awareness remains among non-finance staff. Budgetary control is hampered by inaccurate forecasting, and the quality of financial information needs significant improvement. If Departments cannot understand the cost of a service, the public can have little confidence that the service offers value for money.
	To support better financial management, the National Audit Office has embarked on a series of reports that examine each Department's financial management. For example, in the past two years, the Department for Environment, Food and Rural Affairs has budgeted to spend more than its Treasury funding limits. As the risk of overspending became clear, it had to make cuts, but there are also things to welcome. DEFRA has established more rigorous financial systems and this year's accounts were delivered much earlier.
	Our system of public financial management relies on transparency and clear oversight. Unfortunately, the Ministry of Defence tried to persuade us that the forecast costs of major defence equipment projects were under control by moving £1 billion to other defence budgets. Anyone with a passing familiarity with recent events understands that masking true cost is wrong and dangerous. I hope that the approach was unconnected to the fact that, despite initiative after initiative, lasting improvements in the delivery of vital equipment to our servicemen and women have yet to be achieved. Such creative reporting is the enemy of sound financial management and I do not believe that the Committee would want it repeated.
	The Committee was also critical of aspects of the Ministry of Defence privatisation of QinetiQ. We recognise that the privatisation successfully protected the viability of that strategically important business and that the Ministry of Defence ran the 2006 flotation well. However, the NAO estimated that an extra £90 million could have been raised from the initial 2003 privatisation. Despite the Department's protestations, it is clear that the sale went ahead at the worst possible time and that the Ministry of Defence weakened competition by eliminating bidders too early.
	We were strong, too, in our condemnation of the conflicts of interest affecting QinetiQ's senior management, which the Ministry of Defence failed to manage during the sale process. Public servants should not be negotiating their own incentive schemes with a preferred bidder. The result of the privatisation was a clear disparity in rewards, which the Committee found scarcely credible: while the taxpayer received £9 for every pound invested, QinetiQ's senior management received an extraordinary £200.
	Let us examine reducing internal costs. We all consider precious every additional pound that can be devoted to the front line and that does not have to come from increased taxes or raised borrowing. A year ago, the Government accompanied ambitious new efficiency targets with plans to sell £30 billion of surplus assets by 2010-11. The Committee had to express scepticism over claimed efficiency gains in the past, so I welcome the news that the NAO will audit those savings on a Department-by-Department basis. However, setting savings targets is easier than delivering results. Accounting officers should cut waste, reduce complexity and seek economies in some obvious areas.
	Property should be an immediate target. That is elementary stuff. The Government are almost 40 per cent. worse than the private sector benchmark for using office space, with a potential saving of more than £320 million a year. I am pleased that the Office of Government Commerce has the ambition to seek savings of £1 billion a year, but it will need to do better than its performance against the two key milestones already missed. I trust that the Exchequer Secretary will look to her own house—or her own office block—given the Treasury's parlous position at the bottom of the league for efficient use of space.
	Another unrealised area for savings is using shared services. The Committee had strong doubts about the information on which the Cabinet Office's target of £1.4 billion savings is based. Indeed, those Members present at the hearing will recall that the Cabinet Office had lost the calculations and the underlying data involved in its estimate.
	Reducing complexity in processes is another requirement for an efficient public sector. Nowhere is the financial impact of complexity felt more strongly than in the Department for Work and Pensions; nowhere, that is, except for in Her Majesty's Revenue and Customs.
	Benefit fraud and error continue to be a major drain on taxpayers, with £2.7 billion lost last year. I recognise the progress in reducing reported benefit fraud, but for customer and official error to have nearly doubled in the past five years to almost £2 billion suggests that our benefits system is not merely complex, but risks becoming unmanageable. We have said time and again that, if we are to get a grip on fraud and error, we must reduce complexity in the benefits system.
	Meanwhile, our latest look at tax credits showed the highest rates of error and fraud in central Government. The annual amount may have reduced somewhat, but £4.3 billion remained to be recovered from claimants. In our hearing, we expressed doubt about how much—if any—will be recovered. Nearly £2 billion at least is in doubt. That level of error led the Comptroller and Auditor General to qualify his opinion on the HMRC trust statement for the sixth year running. Despite some improvements to the scheme, it is still not efficiently run. Everyone—claimant and taxpayer—has been let down. Let us hope that the pressure on families to pay back money that they have already spent does not make the coming economic winter coldest for those who can least afford it.
	I come now to risk management. Sound financial management and reducing unnecessary administration are bedrocks to build on, as we have said again and again. It is the failure to manage risk that causes many project costs to soar and delivery to fail. The public sector must never be afraid to innovate or to take well managed risks. We never stand in the way of Departments doing that. Constant innovation is as essential to public sector success as it is to private sector success, but the consequences of inappropriate innovation and misunderstood risk have never been so powerfully obvious.
	If there has, as yet, been no public sector equivalent of the weapons of mass financial destruction that have unleashed such devastation elsewhere, there remain too many examples for comfort of inadequate risk management in public sector projects. Government borrowing is at its highest for 60 years, so a sober look is surely needed at the risks of each new private finance initiative deal racking up debts for schools and hospitals. Those vital public services must remain both financially stable and operationally flexible. Knowledge and good health are too precious to put at risk.
	Only this Tuesday, the London news programmes reported on how NHS trusts in London are now facing severe difficulties with their PFI projects for new hospitals. In conference after conference and in parliamentary questions I have queried the level of debt that the PFI is building up for our children and grandchildren. I have been constantly reassured by the Treasury and, indeed, by the National Audit Office that everything is fine. Listening to those London news reports about the increasing difficulty of London NHS trusts, however, I began to wonder whether my warnings had in fact been pertinent. Many others are worried about the level of debt building up through PFI projects.
	We saw inadequacies in risk management in the Foreign Office's approach to our liability for the 14 overseas territories; in our update report on the single payment scheme, which is still causing problems for farmers; and in the BBC. Perhaps it would help the corporation if the NAO were given full access to the books. We say that as often as the BBC repeats its programmes, so perhaps there is no point in going on saying it.
	Failures to anticipate and manage risk were encapsulated in our report on the Bicester asylum accommodation project. Almost £30 million was spent without delivering any benefit to the taxpayer or in any way furthering asylum policy. It was a controversial project, yet the Home Office did not recognise the serious risk of planning delay. Nor did it give explicit recognition to its own changes to the asylum system—a classic case of the right and left hands expressing surprise at meeting each other in the same place.
	Let us hope that those in charge of a considerably larger project—the 2012 Olympics, which has been in the news again this week—proceed with a greater appreciation of the risks and a higher level of competence. I am sure that all Members present would like to congratulate our sportsmen and women in Beijing on their excellent performance. They finished fourth in the Olympic medal table and second in the Paralympic table four years ago. I was particularly pleased that our sailors who practise my own sport proved more successful than me in my recent damp experience in the Solent, where I managed to overturn my dinghy in a dead calm—perhaps an allegory for some of our political careers.
	Applying lessons to the Olympics from the management of risk in other public sector projects does not give one a wholehearted sense of comfort. There should be realistic assumptions about likely costs and realisable benefits. The estimate of the 2012 budget at the time of the bid—at just over £4 billion, although originally it was £2 billion—was clearly unrealistic in ignoring major factors such as contingency provision, tax obligations, policing and wider requirements.
	The budget has now mushroomed to £9.3 billion, while over-optimistic estimates of private sector funding have been scaled down from £738 million to £165 million today. Watch this space, as I am sure there might well be further reductions. With a revised budget, one could say that that is water under the bridge. My Committee welcomes the fact that the programme is broadly on track, but arrangements to manage the whole programme are not yet in place. We must guard against pressure to change venues and infrastructure and we must be quite clear about the costs and consequences of any such changes.
	Another lesson is that unquantifiable benefits should be made clear, yet the Government's target for 2 million more people to participate in a sport or physical activity by 2012 is based on no conclusive proof that winning Olympic or Paralympic medals influences levels of participation in the community. We must not get too dazzled by the gold medals in Beijing. The PAC is not a tabloid; it is not bedazzled by gold medals, but works in the interest of the taxpayer. Instead, we need to see a plan for using sporting success at the games to improve levels of participation.
	It is also important to have contingencies if matters take an unexpected course. To support medal goals, the Department for Culture, Media and Sport hopes to raise about £100 million from the private sector. Perhaps the Minister can confirm today that there is still a realistic chance of raising that money, as we warned back in 2006 of the risks of leaving it too late.
	There must be a contingency plan for protecting the funds of the sports most likely to win medals in 2012, and the total final cost depends on proceeds arising from the disposal of assets such as the Olympic village after the games. In today's climate, that looks increasingly uncertain. Given these uncertainties, potential demands on the £1 billion of contingency funds that have not yet been earmarked will need very careful monitoring.
	Of course, no risk to any project can be effectively managed without accurate evidence. Departments are responsible for ensuring that Members of Parliament are not misled, even inadvertently, by the evidence they provide. We were therefore very concerned that the Department for Transport gave the Committee unreliable information on the rate of evasion of vehicle excise duty. We produced our report, drawing on its figure that the rate of evasion of duty by motorcyclists was 38 per cent. Yet shortly afterwards, new statistics for evasion, based on a new methodology, put the figure at 9.8 per cent. We expect Departments to be accurate; if they are not sure whether their figures are reliable, they should say so and, if necessary, apologise for any mistakes, as I did.
	In conclusion, the Public Accounts Committee operates from the sound base provided by Tim Burr and the staff of the National Audit Office, who have our grateful thanks, as without them we could do nothing. I am also grateful to the Government for welcoming the Public Accounts Commission's proposals to enhance the NAO's governance. The commission has spent a lot of time on that and I think that it has it right. I look forward to the inclusion of the necessary legislative changes in the Constitutional Renewal Bill in the near future. In the meantime, I am pleased to say that the wheels are in motion to find a permanent successor to Mr. Burr.
	As ever, we are ably assisted by Mark Etherton and the staff of the Committee office. I also pay tribute, of course, to my fellow Committee members, who continue to work hard to hold the Government to account, irrespective of party or politics. Week in and week out, the Committee gives meaning to the spirit expressed by Benjamin Disraeli that
	"all power is a trust; and we are accountable for its exercise."
	It is a spirit that some appearing before us find disconcerting, but it has never been of greater value than in the current cold climate.
	Citizens' interest in the earnings that they pass over to the Government does not end at the point of taxation. Those spending public money are exercising a trust on behalf of the public, and parliamentary accountability is the embodiment of that trust. The Committee provides a guarantee to the public that their interest is not left unrepresented. We do so in times of both prosperity and adversity. Our duty is unaffected by economic fortunes, and public servants' duties to Parliament remain unaltered. Trying times may call for tough messages. The House and the public can, I believe, be assured that our Committee will not shrink from that task. I commend the motion to the House.

Richard Bacon: It is a great pleasure to follow the hon. Member for Southport (Dr. Pugh), who is a forensic member of the Public Accounts Committee; his contributions are always appreciated by its members, of whichever party.
	I endorse the Chairman of the Committee's comments about public expenditure, and the recent bank recapitalisation, in particular. It is entirely appropriate for the Comptroller and Auditor General to examine the huge sum involved on behalf of taxpayers, and I very much hope that the Treasury agrees with that and will assist the National Audit Office in every way.
	Secondly, I wish to comment on the issue of financial management, which has been to the fore in many of the Committee's reports. When I first starting asking what proportion of principal finance officers—finance directors, as they are now called—in Departments have an accountancy qualification, the answer was 23 per cent. The Treasury recently told us that the answer is now 91 per cent, and although that figure excludes the big exception of the Ministry of Defence's finance director, who is in charge of £32 billion of expenditure, enormous progress has been made. I congratulate the Treasury and other Departments on starting to realise that the topic is important and that they have to do something about it. The progress should not go unremarked; the Treasury has understood the importance of the matter.
	That makes it all the more important for the Treasury to give a sensible account of tax credits, the subject of the Committee's eighth report. It stated that
	"there is little evidence the Department has the scheme"—
	the tax credits scheme—
	"under control. Many claimants continue to struggle to understand tax credits and why they are overpaid. There have been many complaints about the process for recovering overpayments and the Ombudsman continues to receive and to uphold a large number of complaints...This level of error led the C&AG to qualify his opinion on the HMRC Trust Statement for the fifth year running. The Department still has no targets for reducing error and fraud."
	If we think that financial management is important, and if the Treasury thinks it is important enough to ensure that qualified finance directors are in place across Whitehall, surely it is important enough to ensure that the department that comes directly under the Treasury's own control—Her Majesty's Revenue and Customs, which has the task of collecting the money that we then spend on various public expenditure programmes—is itself under sufficiently tight financial management that it can account for how it spends its money. At the moment, it is unable to do so—it has not been able to do so for several years. I hope that we will be told when the Treasury expects the Comptroller and Auditor General to be able to sign off HMRC's accounts as clean, because it is only right that what is good for other Departments should be good for the Treasury and its subsidiary departments.
	I wish to make another quick point about tax credits. A settlement was reached between EDS and HMRC concerning the tax credits fiasco. The Treasury originally claimed that EDS should pay it £209 million, but that was later cut to an agreed settlement figure of £71 million. Only about £44 million of that was paid in cash or near cash, the remainder, £26.5 million, was to come from future revenues on contracts that EDS had not yet won with government. In other words, it is to come from future business. Apart from the fact that that gave Government Departments a rather strong incentive to award EDS further business despite, rather than because of, its track record, it has been clear that over the past two and half to three years since the agreement was reached hardly any money has been paid. Most of the £26.5 million is still unpaid; a few hundreds of thousands have been paid and there was one payment of £20,000. The chairman of HMRC for the time being knows that every time he comes before the Committee—unfortunately, I was abroad when he came before us last time, in early October—I shall ask him how much money he has had. He always comes prepared with the answer. Indeed, his distinguished predecessor Paul Gray, who honourably resigned over the issue of the missing discs, said that he would have been most disappointed had the question not been asked. I will continue to ask the question.

Richard Bacon: I am grateful to the hon. Gentleman, who brings me to the point that I was about to make, which is that the various representatives of HMRC have made it very clear that they have been documenting millions of pages of material relating to the case so that they can, if necessary, litigate. But they really ought not to have to. It is in the nature of large scale computer contracts that they hardly ever go to litigation because, at the end of the day, the only people who win are the lawyers. It is much better to avoid litigation. However, EDS should recognise its responsibilities in this area.
	If one goes to the Vote Office and asks for the PAC bundle, one is given all this material I have beside me. My hon. Friend the Member for Tiverton and Honiton (Angela Browning) said that she was rather intimidated by it; after all, it was Fidel Castro who said that any speech of less than four hours cannot be doing any good. I was tempted to be a little more expansive, but the Chairman reminded me that it is impolite to speak for longer than the Chairman himself. He only spoke for 20 minutes, so I will have to restrain myself.
	I wanted to comment briefly on QinetiQ, which seems to have displayed some unwelcome tendencies among civil servants. Lord Gilbert, the former Labour Defence Minister, said on the "Today" programme about Sir John Chisholm, the boss of QinetiQ:
	"Never once in my presence did Sir John Chisholm indicate that he might have a conflict of interest or he was going privately to be enriched by what was going on."
	In the Defence Committee, the hon. Member for Crawley (Laura Moffatt) also quizzed Sir John Chisholm at great length about whether or not there was a financial gain for him and whether he was likely to get shares. The transcript can be seen on page 19 of the evidence. It was absolutely clear that he evaded telling anyone that he was going to benefit financially or through shares. The Chairman of the Defence Committee said:
	"You know what I am getting at. I do not want to see people leaving the Ministry of Defence who have been part of the negotiation... and within 6 months 12 months or so ending up on a tripled salary."
	We know that, for an investment of £130,000, Sir John Chisholm ended up with £25 million of equity in the business. It is probably a bit less than that now, but the principle still applies. No safeguards were put in place. The permanent under-secretary, Bill Jeffrey, made it clear to us that there were no safeguards. The Treasury must revisit the whole issue of QinetiQ and make sure that in any future transactions of that kind, better safeguards are put in place. Many of our constituents are very angry about it and many parliamentary colleagues were very angry about the fact that such a transaction was allowed to occur.
	I wanted briefly to mention the progress on the Rural Payments Agency, which the right hon. Member for Islwyn (Mr. Touhig) mentioned. Johnston McNeill, the chief executive of the agency, came before us and I was quite impressed by his evidence. He gave quite a good account of himself. I have read in detail the Environment, Food and Rural Affairs Committee report on the whole fiasco and he did have a lot of responsibility. But it is also clear that that should have been shared more widely.
	I find it extraordinary that an agency with the title of the Rural Payments Agency had the job of making payments but was unable to tell farmers either the date when they would get their payments or how much they had already been paid. I once worked out the number of payments per employee of the agency, and I think that it was 29. The employees could have been sent out to the farms, with a day for travel there, a day on the farm and a day for travel back, and the whole thing could still have been done and dusted in three months if the payments had been made by personal visit and manually. If people phone their banks, they can find out if they have received a payment and for how much, but that so-called payments agency was unable to provide those figures, which speaks eloquently of the scale of its failure.
	I hope that the Treasury studies the reports from the PAC and the Environment, Food and Rural Affairs Committee and tries to learn the lessons. I agree with the right hon. Member for Islwyn that not enough effort is always made to learn the lessons, and that must change.
	There is a hopeful straw in the wind, because the Treasury has appointed Mr. Martin Read, the former boss of Logica, to try to teach it how to run IT projects and to jettison them as quickly as possible when it becomes apparent that they have gone wrong, again. There was a tremendous headline in a story in an online magazine about the appointment, although it may not be entirely parliamentary:
	"Ex-Logica boss to teach UK.gov how to identify crap IT".
	The project apparently involves Mr. Read looking at how to keep
	"dedicated teams on projects from start to finish"
	and at
	"not being afraid to abandon a project just because it's high profile".
	However, the article points out:
	"Both those aims would run totally counter to the traditional...way of doing things. The very essence of politics and public sector work is to never finish a project and to get out while the going's good. And because no one has a start to finish view of a particular project, no-one can really see how crippled it is, so the chances of anyone sticking their neck on the line and saying it should be pulled are next to zero."
	I hope that that is too cynical a view and that Mr. Read's work will yield some benefits. The fact that he was forced out of Logica after a profit warning following a European buying spree in 2007—so that he presumably bought the companies involved at the top of the market—causes me some concern, but I wish him well.
	My final remarks concern the national programme for IT in the health service. We do not have a report on that before us, although it is a long-term project that has been running for some six years, and is therefore now six years late. Two years ago it had been running for four years and was four years late, so little change there. There has been a development since we last had a chance to discuss it—the withdrawal of one of the major contractors, Fujitsu. Baroness Thornton described its departure in the other place as "a sign of strength", which is an interesting way to put it. Essentially, Fujitsu was prepared to fulfil the terms of its contract, but the Government have said that they would rather keep the project money than have that happen, thus risking a £700 million lawsuit, which—according to the press—Fujitsu is now threatening. And that is a sign of strength, apparently. It reminds me of Tom Lehrer's comment when Henry Kissinger received the Nobel peace prize that it was the end of satire. If that is a sign of strength, what would be a sign of weakness?

Richard Bacon: Does the hon. Gentleman agree that the most interesting thing about the NAO's regular reports on the Olympics—I think that there have been three or four—is not simply that they are about the Olympics but that they are not "posthumous", as he described it. They look forward to an event that has not yet taken place, and are getting in on the act much earlier in the cycle. Does he agree that that could represent a model that the NAO and, in turn, our Committee could apply to other areas of Government spending?

Angela Browning: Indeed. That is why I believe that such projects need to be properly managed, and key people need to take responsibility for them. If there is a properly drafted project management scheme, those responsible should be easily identifiable. As my hon. Friend said, that did not happen and, as he pointed out in his speech, the appalling record keeping compounded the single payment scheme's problems. As I said earlier, I believe that the political imperative was sometimes to blame. Sometimes it would be helpful to have a Minister rather than a civil servant present. I recall that when the right hon. Member for Derby, South (Margaret Beckett) as Secretary of State for Environment, Food and Rural Affairs announced the single payment scheme to the House, it was done in a very hurried way.
	Let me come on to information technology commissioning and the overseeing of IT, which lie at the heart of many of the problems brought before the Public Accounts Committee and covered in its reports. It seems to me that the single payment scheme is a classic example of a policy being introduced hastily—possibly against the advice of civil servants at the time, although how would we know for sure? If more time were taken and more trialling done before a policy were rolled out as a national scheme, the Government and relevant Departments would hopefully pick up more of the many problems caused by complex IT schemes—problems for our constituents and, more particularly for the PAC , problems that lead to a huge waste of taxpayers' money.
	I say again that I am not an IT expert, so I am nervous of venturing down the path of making recommendations on IT to the Government, but it seems to me that the commissioning of software is a particular problem and that the people who draw up the specifications in the first place often do not have the necessary qualifications or knowledge. That brings me back to having proper management information systems—all these issues feed into each other—that are necessary in order to commission correctly.
	There are always going to be glitches with major IT projects—there are bound to be; it is never going to be perfect the first time round—but by trialling and sorting out the glitches before a programme is rolled out, the Government and Departments could avoid many of the difficulties. That applies not just to DEFRA—or EFRA as it is now often called—but across the board. Perhaps one of the worst examples was the commissioning of projects in the Ministry of Defence, but problems have been evident in the NHS and the Department for Work and Pensions, as well as in the Department for Environment, Food and Rural Affairs and the Ministry of Defence.
	I hope that as a result of today's debate the Minister will take forward some of the overall concerns that have been expressed. We have heard specific complaints about individual reports, but I am referring to overall concerns about recurring problems and common themes that the PAC all too often picks up in its reports.
	I conclude by noting the opportunity presented to the PAC to come back to its reports more frequently than at present. It is very difficult to decide which of the National Audit Office reports should be considered in an evidence sitting—ideally, we would like to consider them all. Two a week when the House is sitting is a lot of reading, but, equally, the power of the PAC in comparison with other Select Committees is that it has the opportunity to call the permanent secretary and other officials back in order to monitor progress after the previous report. We already do that to a degree, but in my opinion, not enough. If we could bring reports back more frequently, where appropriate, we could make more of a difference to some ongoing and persistent problems.

Justine Greening: I am very grateful for that extremely helpful intervention. It brings me to the point that I was trying to make, which is that a lot of risk management goes on in government, but sometimes it is—dare I say?—too focused on short-term political risk rather than the longer-term delivery risk of particular projects.
	My hon. Friends the Members for South Norfolk (Mr. Bacon), for Henley and for Tiverton and Honiton made clear points about the issues that the Public Accounts Committee has highlighted, especially those to do with IT projects. I know that the hon. Member for Great Grimsby (Mr. Mitchell) shares our real frustration with a whole range of projects, but he said that we are all socialists now. Although I have said that I am concerned that things are not looking good in our country at the moment, I do not think that they are quite that bad. I share much of his frustration, but that was definitely one comment with which I could not agree.
	I found the comments of the hon. Member for Southport (Dr. Pugh) extremely interesting. He was the one Member who talked particularly about property management. That topic perhaps does not get as much attention as it ought to, and I was extremely pleased to see the PAC examine it. As the Member whose constituency contains the site of the old Putney hospital, which has been derelict for 10 years, I have found it amazing that property management across government sometimes happens at a pace that seems glacial compared with what would happen outside this place. The Committee's report on that matter was quite important in generating a debate not just inside but outside the House.
	I shall wrap up by again congratulating the PAC and its Clerks. It plays a crucial role in our parliamentary democracy and in ensuring that the Government and Ministers are accountable. As I said, its spirit is embodied in the articulate, forensic and tenacious approach of its Chair, my hon. Friend the Member for Gainsborough, who opened today's debate. I wish the Committee well in the many challenging reports that I am sure it will produce over the next few months, and I look forward to our next chance to debate the results of those reports in this Chamber.

Angela Eagle: I agree with the hon. Lady's general observation. There are weaknesses in particular Departments, but there are also weaknesses because of the silo nature of Whitehall. The connections between Departments are often not as strong as any of us would like to see. I reassure her that the OGC is apprised of that fact, particularly with respect to procurement. I know that procurement is not everything, but £175 billion of public procurement a year, of which £70 billion is carried out centrally by Whitehall Departments, is quite a big slug of money to focus on to begin with. That is why we are conducting procurement capability reviews in every Department, and they will be published. We are having a very good exchange with senior managers, who are engaging not in a defensive way but in a way that demonstrates that they are willing to learn.
	As part of the transforming the Government procurement process, we are also trying to give much more training and recognition to procurement professionals across Whitehall. We want to begin to create a cross-Whitehall and cross-departmental culture of procurement. That will benefit both procurement and project management, and there are solid foundations for the development of an approach that will break through the silo mentality that everyone who has been in Government will have experienced. Everyone in the House who deals with Departments can sense that mentality and knows that it exists. I am optimistic that we are making progress in that area, but I cannot say that all the problems are solved and that there is not a shortage of procurement skills in the public service.
	The hon. Member for Gainsborough asked whether the hopes of the Department for Culture, Media and Sport to raise £100 million from the private sector to go to the training and support of elite British athletes were still realistic. Obviously, I should like to begin by joining him in congratulating our sports men and women on their excellent performances in Beijing. We will all remember their various triumphs for a long time, but we also need to recall that, in addition to the lottery funding, £265 million of Government revenue was given to elite athletes for training and support ahead of the Beijing games. For the first time ever, that money included individual living cost allowances that enabled the athletes to focus on full-time training for their sports. That was very successful in helping them to achieve the excellence that they did achieve. We stand by our commitment to give our elite athletes the best possible preparation. There can be no absolute guarantee of private sector funding, especially in circumstances that are changing as much as the present ones, but we continue to work towards securing it.
	I shall take a little of the House's time to talk about some of the general issues raised by the hon. Member for Gainsborough. He asked about the governance of the National Audit Office, and a great deal has happened in that respect since our last debate five months ago. We need to recognise the changes to the NAO that will take place in the coming year, and I am especially grateful to the hon. Gentleman for his continuing efforts, which he mentioned in his contribution, in helping to bring about essential reforms to the office's governance, as recommended by the Public Accounts Commission. We all want those reforms to be introduced, and I am pleased that the process of appointing for a new commission chairman and new Comptroller and Auditor General has begun. I have every expectation that successful candidates of the right calibre can be announced in due course.
	I should also like to record the Government's gratitude to Tim Burr, who has displayed impressive abilities as CAG. He deservedly commands the respect of the Government and all of us in the House as he guides and leads the organisation through this period of transition. We need the NAO to hold the Government to account, and he is tenacious in ensuring that that continues to happen.
	As I have said on previous occasions, I believe that full and open financial transparency is an essential characteristic of a modern parliamentary democracy. The hon. Member for Putney said that when all the political rhetoric is settled, in the end the numbers remain. It helps us to interpret them if we get them in a timely fashion. The PAC, supported by the NAO, has been at the heart of the scrutiny process for an extremely long time. I think that the Committee as an entity goes all the way back to Gladstone—although I am obviously not referring to its present membership; we might feel quite old sometimes, but I hope that we never feel that old, collectively or individually.
	I recognise and applaud the Committee's unfailing and challenging examination of the Government's use of the money that Parliament has voted to them. It undoubtedly aids parliamentary accountability. However, we cannot allow ourselves to sit on our laurels just because the Committee has existed for so long and is venerable; we have to keep looking into how we can modernise the way in which the system works. Our alignment project, which the Prime Minister announced in July 2007 in the Green Paper "The Governance of Britain" aimed to carry out that modernisation. When implemented, it will simplify and put in a more consistent format public spending plans, parliamentary Supply estimates and published resource accounts. In essence, that means that Parliament and the public will be able to compare apples with apples, and pears with pears, instead of apples with pears, or chalk with cheese.
	I hope that the project will greatly facilitate a reasonable understanding of where money goes, how it flows through the system, where it was when Parliament voted on its use, and to what effect it was used. Members of Parliament, Select Committees, the public and commentators should be able to track departmental spending more easily, all the way from the planning and budgeting stages to the out-turn. The alignment project does not sound particularly exciting, but those of us who have seen how it will work when it is finished are excited by it, and I am sure that the Committee is, too.
	As we said earlier, the Committee has managed to publish 30 reports since our last debate on the subject. It is exhausting just looking at them. We have had a flavour of them today. Those listening to our debates will appreciate the sheer breadth of the work that has been done. It is no mean achievement, and it clearly demonstrates the Committee's huge work load. I want to say a few words about the Committee's 44th report. The formal Treasury minute has not yet been presented to the House, but the report is about the roll-out of the Jobcentre Plus office network, which I was involved in when I was a Minister at the Department for Work and Pensions. It was heartening to read the Committee's report, and it is pleasing to know that when things go well, the Committee fully acknowledges the achievement.
	I agree with the report that there are important lessons to learn from any transformation project, and certainly from the transformation of Jobcentre Plus from a decrepit and inefficient network of 1,500 offices scattered randomly around the country. As I recall, the furniture was bolted to the floor when I was first responsible for them. The offices have been changed into a high-quality, well-located network of 800 offices fit for the 21st century. Staff in the offices will have a very important job to do, given what has happened to unemployment figures in the past few months. The offices are now more efficient and are equipped to do that job, thanks to the effective transformation of that public sector service.

Angela Eagle: I suspect that if we sent an e-mail to every permanent secretary and asked them to look at the report, that would be a better way of doing it, and I certainly undertake to draw it to their attention.
	I understand the irritation of the Committee and its Chairman at the publication in February by the Department for Transport of revised vehicle excise duty evasion estimates for 2007, which indicated that evasion was much lower than cited in the PAC's fifth report published a month earlier. I am very sorry that the subsequent publication of a Treasury minute, made in error, compounded an unfortunate series of events. That sounds like a film or a book, but it is something that Committee members and the NAO had to put up with. I hope that Members accept that at no time did the Government seek to mislead or somehow embarrass the Committee. Lessons have been learned from that experience, and we will strive to avoid a recurrence of such an episode.
	We should after all rejoice that following the introduction of an automated number plate recognition system, evasion of vehicle excise duty, with its implications for accurate licensing information and the detection of crime and public revenue, is at a low level, which is something we all welcome. People who see the police using that information to great effect, as I have in my local area, to prevent further crime, know how important it is to have accuracy.
	The PAC has expressed continuing interest in the private finance initiative, and its recommendations and reports on the matter are invaluable. Hon. Members have helped us to review, reflect and revise our views. The Committee has added value by choosing a wide and useful range of topics over the years. It has helped us assess and analyse the risks in infrastructure projects, and improve the means of procurement and efficiency. We look forward to continuing that fruitful dialogue as we extend the range of approaches to complex procurement, always seeking best value for money for the taxpayer.
	The PAC's recent recommendations in its September report, "HM Treasury: Making changes in operational PFI projects", were welcomed by the Treasury. I was pleased that the Committee has endorsed recent Treasury guidance that will help to ensure that value for money is obtained when changes are made, and that it has also endorsed the roll-out of training programmes to support contract management. Before I conclude, may I touch on the concerns expressed by the hon. Member for Gainsborough about the apparent largesse of space at the Treasury, which I have addressed in a separate note outwith my speech? Finally, may I repeat my gratitude for the hard work of the PAC and the National Audit Office, which ably supports it. Together, they make a major and lasting contribution to the performance and delivery of public services across the United Kingdom, and they keep the Government and public servants on their toes. Their work will continue to be as effective as it has always been, and I look forward to working with them in future and, if circumstances allow—one never knows—to other occasions such as this.

Denis Murphy: I thank the right hon. Gentleman for that intervention. I agree with him, and it is a subject I intend to tackle in more detail later. I have been hugely impressed by the voluntary sector and council officials in Morpeth.
	Apart from the long-term contingencies, there is an increasing need for emotional and psychological support, which will have an even greater impact as people are unable to return to their homes for Christmas. It is important that the agencies responsible are able to identify and respond effectively to a need once it is identified. Additionally, there is a need to lift morale throughout the period of recovery. I am delighted to say that there appears to be no increase in criminal activity. However, there is genuine concern that household possessions kept on the first floors of houses in housing estates that are virtually deserted overnight could be at risk. The police are currently providing additional patrols in the affected areas, and I ask the Minister to press for the continuation of these much needed patrols.
	I mentioned earlier the large number of properties that were not insured. Flood damage repair and renovation to an insured property could be severely compromised if it is adjoining an uninsured property with similar levels of severe damage. There is no doubt that severe financial hardship is being experienced by everyone affected by the flooding, but especially those people who are not insured.
	Unfortunately, many of the main public buildings were badly affected by flood damage. Morpeth library was immensely popular and well used by many residents. So severe was the damage that it will probably have to be demolished. It is therefore essential that a new library is built as soon as possible. The leisure centre suffered similar damage, but no decision has yet been made about its future. However, one thing is certain: it will be closed for a long time. The same applies to the doctors' surgery and the ambulance station.
	I have tried to outline briefly the extensive damage that the huge flood did to the town of Morpeth. I am here to seek Government support to help to rebuild the town and, more important, to ensure that we do everything possible to prevent a similar occurrence.
	The Environment Agency has been heavily criticised for its failure to warn the residents of Middle Greens of the impending flood. That criticism was fully justified, but we need to ensure that the early warning system never fails again. The agency has assured me that the changes it has introduced will guarantee that everyone is informed in future. I also urge residents who are not registered to register now—it is a free service.
	I have met the agency's new chairman Lord Smith to press for early implementation of a new flood defence scheme for Morpeth. He has agreed to visit Morpeth in the next few weeks and he is keen to move forward quickly with the scheme.
	The economic assessment is almost complete, and it is intended to consult the people of Morpeth on the options available no later than next January. The agency intends to run several items in parallel to enable it to commence the scheme several months earlier than originally planned. I am delighted to say that funding no longer appears to be a problem.
	In the next few weeks, work will commence on rebuilding a much stronger flood wall to replace the one damaged near the library. Urgent structural assessments will take place of all the various flood defences in the town and of the damaged weir at Highford. The agency is also considering my request, which residents affected by the floods put to me, to begin river bed dredging and clearance. There is a strong economic case for the scheme, which could bring huge investment to Morpeth.
	A new flood defence scheme would release valuable riverside land for redevelopment to complement the current town centre development. A new health centre, providing state-of-the-art diagnostics and treatment, has been under discussion for more than two years. We should accelerate that development and include a new library on the site. If it proves necessary to demolish the leisure centre, consideration should be given to building a new one, perhaps on a new site. There are many other options—I merely make the point that enormous opportunity exists for the town and we need to maximise it.
	While local business and commerce has been badly affected, 1,000 properties require extensive building works, new furniture and decoration. At a time of building slump, that could help many local businesses. I hope that people source those services locally, and of course we must endeavour to keep out the cowboy builders.
	I was impressed with the Government response during and immediately after the flooding. I was contacted by the duty Minister—the then Minister for the Environment, my hon. Friend the Member for Oldham, East and Saddleworth (Mr. Woolas)—from 10 Downing street at 9 pm on the Saturday evening to warn me that Morpeth had been badly flooded. I was on holiday in Dorset and I returned home immediately. On Sunday morning, I was called again, this time by the Secretary of State for the Environment, Food and Rural Affairs, my right hon. Friend the Member for Leeds, Central (Hilary Benn), who inquired about the extent of the damage and sent his best wishes to the people of Morpeth. I spoke to him and the Minister responsible for flood recovery, my hon. Friend the Member for Wentworth (John Healey), who said that he wished to visit. He did so the next day. The people of Morpeth also received a much-needed boost in the form of a royal visit by Prince Charles and his wife. They were accompanied by the Minister for the North East of England, my right hon. Friend the Member for Newcastle upon Tyne, East and Wallsend (Mr. Brown), whom I am delighted to see in his place today. He has done a great deal to help me and the people of Morpeth. By any standards, it was a great response.
	I hope that my right hon. Friend the Minister will, in her response to the debate, show the same concern for Morpeth and assist its speedy recovery. Morpeth needs urgent funding in the form of Bellwin. It also needs another £600,000 to try to assist the local authority with the expenditure that it has already incurred. I will provide my right hon. Friend with the detailed breakdown of that expenditure.
	Castle Morpeth council is a very small local authority; its chief executive Ken Dunbar, his deputy Trevor Walker and all its employees have performed remarkably. They are conducting an inquiry into the flood, and it is essential that all agencies co-operate with it. Their hard work, skill and dedication have been exemplary. They deserve our thanks and recognition for their excellent work during the flooding and for their ongoing work since then. I urge my hon. Friend the Minister to ensure that the necessary funding is in place for them to continue it.
	The voluntary sector also performed exceptionally well. The Red Cross has been invaluable, as have the Lions and the Rotary club, which are raising a large sum of money to assist flood victims. The citizens advice bureau is under increasing strain, but understandably has to deal with many more cases. I request that the Government make a direct donation to the voluntary services in and around Morpeth to enable them and others to continue helping the people of the area.
	In conclusion, the events at Morpeth on that terrible September weekend were both dramatic and dangerous. That no lives were lost is down to the skill and dedication of the emergency services and of many Morpeth residents—and, of course, some good luck. The Environment Agency's decision to commence an early flood defence system means that it will probably not happen again. Morpeth needs all the help the Government can provide to help with rebuilding and regeneration. I hope that the Minister will confirm in her reply that that help will be made available.

Jane Kennedy: I congratulate my hon. Friend the Member for Wansbeck (Mr. Murphy) on securing this debate. We had an interesting and useful debate on Monday night on the wider issue of flooding in Northumberland, which was inspired by the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith). I apologise to those Members who were present—including my hon. Friend the Member for Wansbeck and, indeed, the Minister for the North East, my right hon. Friend the Member for Newcastle upon Tyne, East and Wallsend (Mr. Brown)—in that some of what I say today may be a little familiar. It is important to reinforce some of the important points.
	It may be worth saying that over the last 40 years, Morpheth has grown rapidly, with about 1,000 properties estimated to be at risk of a one in 100-year event. Current standards of protection vary for different parts of Morpeth and the Environment Agency estimates the average protection at about 60 years. Several studies of the river Wansbeck flooding have been carried out, the most recent of which is the Wansbeck strategy study. My hon. Friend referred to it and I will return to it in a few minutes.
	The Northumbria regional flood defence committee provided funding through the local levy to carry out investigations in Morpeth further to understand the flood risk and to establish whether any quick wins could be developed. As the scope of the local area project has been developed in 2007, additional flood defence grant-in-aid funding became available and the project transferred to that funding stream.
	As I described on Monday, the circumstances arising between Friday 5 and Sunday 7 September affected most of England, but the most serious consequences were felt in the north-east, with the constituency of Wansbeck and the town of Morpeth in Northumberland being most affected. I applaud my hon. Friend for the strenuous lengths he went to to draw the issue to the attention of Ministers, albeit that we were first alerted by my hon. Friend the Member for Oldham, East and Saddleworth (Mr. Woolas). I know that my hon. Friend the Member for Wansbeck spoke personally to the Prime Minister about the impact of these events on Morpeth and he also secured a visit by the Minister for Local Government.
	I thus congratulate my hon. Friend again on the efforts he has already made, as well as on today's debate and the various suggestions and requests that he has made. The issues that he—and, indeed, the right hon. Member for Berwick-upon-Tweed—raised today will be studied in detail and given careful thought and consideration by me and my ministerial colleagues as we consider how the Government should respond to the experiences of Morpeth.
	I also described on Monday how the severe rainfall that caused the flooding was first identified as a potential threat a number of days before the actual event itself. By Wednesday 3 September, the Environment Agency and the Met Office began to track the low pressure system and potential rainfall. By Thursday, they were beginning preparations in case of serious flooding. Heavy rainfall early warnings were issued for the north-east of England, and flash flood warnings were sent out across many further parts of the country on the Friday. Through the early warning system and the new and improved working arrangements between the Environment Agency and the Met Office, warnings were issued to alert local authorities and the emergency services, and preparations were made to prepare vulnerable people and areas.
	My hon. Friend drew attention to the incredibly heavy rainfall that affected the north-east, with 150 mm of rain—6 inches—falling on to already saturated ground and full river catchments over 48 hours. The average monthly rainfall for that time of year is 50 mm, or 2 inches. I am afraid that I always convert metric measures to imperial in my head. In fact, according to the Environment Agency, the flooding that occurred was estimated to be a one-in-150-years event.
	At the time—and since—a great deal of attention rightly focused on Morpeth, where the first flood watch alert was issued at 3.30 on Saturday morning, with warnings escalating throughout the day. I described that during Monday's debate. My hon. Friend mentioned the flood warnings. For the purpose of the Environment Agency's flood warning system, Morpeth is divided into five areas. Four warnings were issued. The severe flood warning intended for the Middle Greens area was issued as a downgrade at 12.49 pm. The residents would not have received that information: it went to professional partners only. A downgrade is normally issued when the Environment Agency believes that waters are receding and there is a settled outlook. Although the residents did not receive the level of flood warning service that the Environment Agency expects to offer, they were engaged in constant dialogue with the agency's professional partners, and the evacuation from Middle Greens was not compromised.

Jane Kennedy: It is the purpose of debates such as this to allow precisely that sort of representation to be made. I know that the Environment Agency will want to learn lessons, and indeed has already learned lessons, from the experience of Morpeth in September. It is trying to find ways of making the system more resilient, including rationalising warnings so that the whole town receives the same warning should such warnings ever need to be issued again. It is also instituting additional checks to ensure that the mistakes made in Morpeth are not repeated. It has apologised for the errors, and reaffirmed that although the warnings were not received as planned, it was in constant dialogue. It clearly believes that the evacuation was not compromised, but, as my hon. Friend rightly pointed out, the residents of Middle Greens are very grateful indeed for the actions of their neighbours, to whom I pay tribute for their swiftness in rising to the challenge.
	In Morpeth, approximately 1,000 homes and businesses were affected by the flooding, and around 250 families were looked after in rescue centres. As my hon. Friend said, and as I said on Monday, the evacuation of Morpeth was successful. As I acknowledged on Monday, flooding of homes and businesses is always devastating for those affected, but such events will take place from time to time, despite the substantial increase in flood defence spending that the Government are implementing. I was pleased to hear my hon. Friend's description of ministerial readiness to respond to the events of that September weekend. I was also, therefore, pleased to hear of the success of the multi-agency approach, and that those involved showed what can be accomplished through strong partnership work. On Monday, I paid tribute to the emergency services for the excellent job they have done in dealing with the flooding events, and I know that that would be echoed on both sides of the House. The actions of many third-sector organisations following the flooding events has once again shown how our communities can pull together at difficult times. I hear what my hon. Friend has said about further financial assistance being needed by such organisations. Such matters will have to be considered while we await the full claim from Castle Morpeth for the Bellwin assistance.
	In Northumberland, the local recovery and support operation is under way and will continue for some months yet. I am particularly grateful to all involved for having pulled together in the face of such challenges. I described the involvement of One NorthEast, the regional development agency, which has made more than £500,000 available to help with immediate costs for affected businesses, and my hon. Friend the Minister for Local Government has confirmed that the Bellwin scheme has been activated. Castle Morpeth has registered an intention to claim for Bellwin assistance and has been provided with the necessary information to help with a subsequent claim. The Department for Communities and Local Government awaits the details, and it is also expecting a request for an extension to the normal arrangements for reimbursement referred to by my hon. Friend, and it will consider that when it is received.
	On Monday, I described some of the emergency works the Environment Agency is carrying out in the area. However, more important for the longer term is the initiation of the EA's flood alleviation scheme, which commenced in December 2007. The river Wansbeck strategy study determined that a stand-alone flood alleviation scheme should be progressed with in Morpeth, and an initial site investigation was carried out and an environmental assessment is under way. In addition, in partnership with the Northumberland Strategic Partnership, a detailed business case is being carried out to determine the impact of flooding on local businesses. The scheme is at the end of year one of its current four-year programme. However, the EA is exploring the possibility of an accelerated time scale for construction of the works. I am delighted to hear my hon. Friend's description of the EA's willingness to engage at a local level, listening to what local residents have to say about the EA's proposals. I commend that way of working, and I encourage the EA to continue down that path. I know that he will be quick to raise with me any concerns he might have should that approach begin to slip, and I will be very open to hearing them.
	Although substantial flooding did occur in parts of the north-east at the beginning of September, it is important to remember the many flood defence systems were not breached despite the very heavy rain. I referred to some of those in detail on Monday. The EA is responsible for maintaining and repairing flood defences, including the installation of temporary defences where needed. During the past year, it has inspected 180,000 assets and carried out work that now means that 95 per cent. are serviceable and will perform as designed during a flood event. The EA spent £377 million building and maintaining flood defences in England, as well as raising public awareness through greatly improved flood-mapping and warning systems.

Jane Kennedy: I am very pleased that the right hon. Gentleman has made that point. I discussed that very issue with the president of the National Farmers Union this morning. It is very important that the Environment Agency considers all stakeholders and all those affected as the country wrestles with the problems of rising sea levels and the threat of high levels of ground water and the sort of inundations that we saw that weekend in September. He is absolutely right that if the water moves somewhere else, somebody else is affected—perhaps not their life and limb and their homes, but agricultural businesses are also very important and the impact of flooding on them needs to be taken into account. As a new Minister in this area, I intend to look into that and ensure that it is not discounted as we consider all the effects of flooding.
	I have described the increased investment, and in recent years our experience of managing flood events has also increased. Last year, we immediately established an independent review of the lessons to be learned from the September 2007 flooding, led by Sir Michael Pitt. Sir Michael's final report was published on 25 June 2008 and includes 92 recommendations. The Government have already welcomed the report and announced initial allocations from the £34.5 million that the Department for Environment, Food and Rural Affairs has set aside for the next three years to take the recommendations forward. We will say more about our plans later this year, and I hope that a prioritised action plan will be produced—in the autumn, it says on my notes, but it feels as though we are near winter given the weather outside. It will certainly be produced shortly.
	Over the past year, we have undertaken a vast amount of work to increase preparedness against future flooding, and we have taken on board the recommendations of Sir Michael Pitt's interim report on a diverse range of projects such as the encouragement of better surface water drainage, the exploration of resistance and resilience measures for householders in high-risk areas, the finalising of national guidance on multi-agency flood planning and many more.
	An important aspect of our work is the production of a floods and water Bill, and a draft is planned for pre-legislative scrutiny, for which it is an excellent candidate. We propose that there will be consultation in 2009. It is our intention that the draft Bill will simplify and streamline the rather complex and perhaps outdated flood and coastal erosion risk management legislation, including on the interrelationship of the roles and responsibilities of, among others, the Environment Agency, local authorities, internal drainage boards, the Department and Ministers.
	Although we will never be able to eradicate the threat of flooding, I remain confident that the events of September demonstrate the preparedness and professionalism of those charged with responding at national, regional and local level. I am confident that we are much better prepared today for the challenges that we will face in the coming months and years, although for those people whose homes and businesses were affected, we can have nothing but sympathy and a commitment to do more to help.
	 Question put and agreed to.
	 Adjourned accordingly at eighteen minutes past Five o'clock.
	Correction
	 Official Report, 22 October 2008: Division No. 286, in column 398, in the  Ayes insert: "Soames, Mr. Nicholas".
	Division No. 282, in column 430, in the  Ayes, insert Murphy, Mr. Jim and delete Mason, John.
	Division No. 282, in column 430, in the  Ayes, insert Moss, Mr. Malcolm